MagicPoopCannon

The S&P is Struggling At Major Resistance! Epic Fall To Come!

CME_MINI:ES1!   S&P 500 E-mini Futures
Hi friends! Welcome to this update analysis on the S&P 500 , via the E-mini futures contract! Let's get right to it! Looking at the daily S&P chart, we can see that the market has now contacted the upside resistance zone (in red.) However, more importantly, we can see that the market is beginning to produce a negative reaction at the top of this newly formed downtrend channel (in blue.) So, the market is showing signs of exhaustion here, and I believe that there is a high probability of a severe rollover now. I have been projecting a similar movement in the market since December's major collapse (see attached charts,) and I still believe that the market is on the brink of recession.

This bull market is now 10 years old. It is the longest lasting bull market in the history of the US financial system. So, from a purely time based perspective, the likelihood of a continuation of this bull market is becoming increasingly unlikely. Although, it's existence and subsequent resilience is purely a result of over five trillion dollars in quantitative easing, which was unprecedented in itself. Regardless, the technical similarities to 2008 are very convincing for the argument that the top is in, and that an earth shattering bear market is likely to ensue.

The MACD has rolled over bearish , just below powerful resistance (red horizontal trendline,) and the RSI has reversed from the oversold level. So, the underlying strength indicators are rolling over, as the market struggles at the top of this downtrend channel and lateral overhead resistance. In my opinion, a sharp reversal candle on high volume will be a powerful conformation to the aforementioned sell signals.

From a fundamental standpoint, you have to realize that earnings per share ( EPS ) growth has already peaked. Additionally, the market is CLEARLY acting extraordinarily negatively, to tiny 0.25% interest rate hikes. Folks, understand one thing, when a market like this, can't handle 0.25% rate hikes, while rates are at historic lows (only 2.5%) we have a MAJOR problem. Not to mention an inversion of the yield curve, economic pressure from the trade war (although a trade deal is already priced in) severely over-leveraged corporate debt, problems in Europe, such as Brexit issues, problems in Italy and France, and general economic tension in the Eurozone. 

And what can the Fed do this time!? Cut interest rates? Reverse course? QE4? Interest rates are only at 2.5%! In 2007, the federal funds rate was 5.25% — more than double its current level. That means the Fed has little adjustment space to jump-start the economy again, despite the fact that the market is dramatically higher than it was in 2008. Furthermore, they already have a heavily inflated balance sheet , well in the trillions. So, they are increasingly powerless, to rescue this market (THAT THEY INFLATED) when it starts to collapse. And what will happen then? Corporations will default on the debts they are over levered against. There will be widespread corporate bankruptcies, and we could be looking at an EPIC debt crisis as a result. That introduces the possibility that bond yields could collapse. Particularly, if we fall into a recession, that the Fed is unable to rescue us from. Bond yields would be in very dangerous territory, if China, Japan, and others were forced to sell US treasuries, to protect their own economies from economic turmoil. That would cause bond yields to plummet, because they would obviously not sell those bonds at a AAA rating, and then interest rates would skyrocket, causing the $22Trillion federal deficit to skyrocket, far surpassing GDP. That would literally cause the Fed to lose control of rates. Sound far fetched? I can assure you that it isn't. 

This stuff may not happen immediately, but the stage is set. How can the damage be reversed? We are living in an artificially inflated economy, and the debt crisis that looms in the background is going to usher in the greatest financial crisis that humanity has ever witnessed. That's my opinion, and it is well justified. Do you realize that we have $116Trillion in US unfunded liability debt? $116 TRILLION! Don't believe me? Visit usdebtclock. org and see for yourself. Those numbers are generated directly from the Federal Reserve . Our unfunded liability debt is equal to 77% of the value of our national assets. That includes our military, our infrastructure, our intellectual property, our aerospace industry, our medical industry, tech, everything that America owns, is $149Trillion. We have a major, major problem, when debt accounts for 77% of our national assets. It may not happen immediately, but this thing WILL collapse. The Fed may kick the can down the road, and try to lower rates and start QE4, but they'd just be further inflating the greatest bubble of all time. I hate to be the bearer of bad news, but this is a very serious economic risk. That said, the risks that I have defined are my OPINION. I do not condone or suggest any financial reactions to this statement of my opinion. 

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I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic! Au revoir. 

***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.*** 

-JD- 

Comments

With all of this said......... what is the best way to invest your money in the mean-time, in your opinion?
+8 Reply
@millert25, I would love to hear feedback on this question as well. We're ridding out ETH and averaging about 1.12% a day right now going long and short in the last 106 days. It might surprise some but I don't think this is going to be as bad as people think.
Reply
gvoommen millert25
@millert25, hold cash and preserve capital. Definitely don't buy gold or cryptos as it will crash along with the stock market.
Reply
@gvoommen, Lol, gold may go down initially but when the dollar tanks gold will skyrocket. There is no alternative store of value other than gold and silver.
Reply
gvoommen younolikeyounobuy
@younolikeyounobuy, that's what they said in 2011 about gold and silver. I know how the story ended.
+1 Reply
@gvoommen, it wasn’t time, people thought it was. The big one is coming. No one could have predicted the bubble would go on this long. The dollar will absolutely get destroyed, along with real estate, cars, you name it.
Reply
millert25 gvoommen
@gvoommen, Sorry but I gotta disagree with you there. Crypto is in an accumulation phase right now and should start moving up in the next year. The dollar is at its peak and will need a few years to correct when its bull run is over. Just based on charts alone one would see that the dollar tanking could coincide with a crypto bull run. If the dollar is tanking during a crypto bull run you could see all kinds of money enter the crypto world. Just my 2 cents.
+3 Reply
gvoommen millert25
@millert25, only time will say who is right and who is wrong.
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millert25 gvoommen
@gvoommen, Yes sir you are correct.
Reply
We're expecting to see a move down but not as far as people may think. The news is pumping a drop but we are now above the master momentum line in orange which shows a lot of upward bull power. I think an orange line retest and a move back up is most suitable. We broke the Auto Ascending Trendline which means we "should" go bearish but I think a bullish move back up after a short term "smaller" drop is due. Let's watch :) Thanks for the TA!
+7 Reply
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